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Asia sugar: Thai premiums seen unlikely to rebound

TOKYO: Thai raw sugar premiums are unlikely to rebound in the near term, despite the cancellation of a Thai export sugar auction on Thursday, as the action won't improve market fundamentals, traders said on Friday.

The Thai Cane and Sugar Corp (TCSC) cancelled the auction of 292,000 tonnes of quota B export sugar left over from its previous auction last December.

TCSC officials said they cancelled the auction because the bids from 15 bidders taking part in the sale were too low. The lowest bid was made at a 10 point discount to New York's Coffee, Sugar and Cocoa Exchange, while the highest bid was at a premium of 12 points.

Traders said the cancellation showed Thailand's intention not to sell its sugar in a way that would knock already-depressed market prices down even further. But some warned the TCSC might eventually miss the chance to sell off its sugar, as they cannot see any prospect of sugar price recovery by the end of the 1999/2000 (November-May) crushing season.

"They should have sold all the sugar at the December auction. The longer they wait, the lower sugar prices are becoming," said a trader at a Japanese trade house. "It seems useless for them to delay sales any longer."

In the December auction, the TCSC sold only 108,000 of the total 400,000 tonnes of quota B sugar. The premium achieved was the lowest in 19 years at 15 points.

Thai sugar prices will continue to be depressed by ample supplies of sugar from other producing countries and slow demand from major importer Russia, the Japanese trader said.

A trader at another Japanese trade house expected TCSC to return the remaining sugar to Thai mills to be sold via private deals.

"Mills have enough space in their warehouses to store sugar, probably about one million tonnes in total. They may withhold sales as long as they can," he said.

On Friday, Thai raw sugar premiums were barely changed from their Wednesday levels. Premiums for January-March shipment were offered at 22 points a pound over New York without bids.

Premiums for March-May shipment were quoted at 5/22 points, while premiums for May/July and July/September shipment were quoted at 5/20 points.-Reuters